More property sector easing expected as Chinese builders struggle to sell homes, analysts say

The value of combined contracted sales at top 100 developers fell 47.2 per cent in February from last year, widening from a slump of 41 per cent in January: CRIC

Policymakers will have more supportive measures to reverse the very weak sales trend, analyst says

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A construction site in Shanghai. Some signs of a recovery were visible towards the end of February, after some relief measures were extended to the property sector by Beijing. Photo: Bloomberg

Published: 4:30pm, 1 Mar 2022

China’s biggest property developers are struggling to sell homes despite the introduction of some relaxation measures by Beijing.

The value of the combined contracted sales at the country’s top 100 developers fell 47.2 per cent in February from last year to 401.6 billion yuan (US$63.6 billion), widening from a slump of 41 per cent in January, according to China Real Estate Information Corporation (CRIC), which compiles industry data. Contracted sales or presales, which account for about 90 per cent of new home sales, are the primary cash stream for China’s home builders.

Analysts said more easing was on the cards.

“Given the importance of China’s property sector to its gross domestic product and jobs market, we expect policymakers will have more supportive measures to reverse the very weak sales trend,” said Raymond Cheng, managing director of CGS-CIMB Securities.

China’s US$1.7 trillion housing market has been under pressure since mid last year, when China Evergrande Group, the country’s biggest home builder, started to default on debts owed to suppliers, contractors and those who had bought its high-yield wealth management products.

The central government has rolled out some easing measures, including lower mortgage rates and faster home loan procedures, to help improve sentiment.

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